(Updates prices)
By Bruno Federowski
BRASILIA, July 3 (Reuters) - The Mexican peso firmed sharply
on Tuesday after the newly elected president, Andres Manuel
Lopez Obrador, sought to assuage investors, magnifying a global
bounce in emerging market assets.
Obrador, who cruised to victory over the weekend as the
first leftist elected president since one-party rule ended in
2000, has strived to dispel fears he might be averse to private
investment when he takes office on Dec. 1.
One of his advisers on Monday told Reuters the election win
would jumpstart negotiations on the North American Free Trade
Agreement, and that an agreement was possible before his
government takes power in December.
"We think at current levels, most of bad news regarding
NAFTA and presidential elections are priced in the Mexican
peso," Bank of America Merrill Lynch wrote in a report. "The
currency is close to fairly valued and positioning is more
balanced."
The peso firmed 2.53 percent, by far the biggest
gainer among Latin American currencies, as improved sentiment
over Mexico helped to magnify an emerging markets rally.
Mexico's benchmark stock index was also up 0.89
percent.
"The guidance up to now is consistent with what the market
would like to see or hear," said James Salazar, an analyst with
CI Banco.
Higher-risk currencies had suffered in recent days because
of the threat of a full-blown trade war between the United
States and China, sending the yuan on a tailspin that
reportedly forced China into intervention via state-run banks.
A Chinese central bank adviser was also quoted as saying
authorities did not expect significant yuan depreciation, which
helped the yuan reverse early losses to move back into positive
territory, supporting other emerging market currencies.
In Argentina, the benchmark stock index soared 6.66
percent as investors began to buy back the stock after major
losses.
"As long as the government fails to stabilize the exchange
market, the market in general will continue to show marked
oscillations," an investor said.
Latin American stock indexes and currencies at 2006 GMT:
Stock indexes Latest Daily YTD pct
pct change
change
MSCI Emerging Markets 1,058.99 -0.03 -8.56
MSCI LatAm 2,468.99 1.97 -14.39
Brazil Bovespa 73,630.61 1.09 -3.63
Mexico IPC 47,071.02 0.89 -4.63
Chile IPSA 5,254.02 -0.89 -5.58
Chile IGPA 26,643.45 -0.74 -4.78
Argentina MerVal 26,982.71 6.66 -10.25
Colombia IGBC 12,360.87 -1.11 8.71
Venezuela IBC 104,411.37 12.35 8,166.02
Currencies Latest Daily YTD pct
pct change
change
Brazil real 3.8944 0.41 -14.92
Mexico peso 19.4700 2.53 1.18
Chile peso 649.3 0.58 -5.34
Colombia peso 2,908.3 0.72 2.53
Peru sol 3.286 0.03 -1.49
Argentina peso (interbank) 27.8700 1.61 -33.26
Argentina peso (parallel) 28.9 0.17 -33.46
(Reporting by Bruno Federowski; additional reporting by Julia
Love; Editing by Dan Grebler and Grant McCool)